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  • Will You Add? - Ways To Minimize Risks In Your Commercial Real Estate Investment

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    ue paying rents. According to statistics, brand name tenants are more likely to be in business next year than non-brand name tenants.
  • Ask for lease guarantee. When a tenant is a small corporation, ask the owner of the corporation back up the lease with his or her personal assets. Thi
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    When you invest in a commercial property, you all hope that the property value will go up and the income will continue to increase. However, you also have to plan for the downturn too. There are ways to minimize your risks when you invest in a commercial property:

    1. Choose a property with multiple tenants instead of single tenant. This will spread out the risk as you don’t put all eggs in one basket. When a tenant terminates a lease, you will potentially just lose a portion of the total income. It’s also easy to find a tenant looking for a small 1000 SF unit.
    2. Choose a property with long term leases over month-to-month leases. Month to month tenants can move out with short notice when their businesses go down.
    3. Avoid having most of the leases expire at the same time. That way in the worst case, you will not have to face with a scenario that the whole building is vacant.
    4. Choose brand-name over no-brand tenants when you have a choice. Leases from brand-name companies like Walgreens, Subway, HR Block are sometimes guaranteed by the corporations. So when they have to shut down the store, the corporations will continue paying rents. According to statistics, brand name tenants are more likely to be in business next year than non-brand name tenants.
    5. Ask for lease guarantee. When a tenant is a small corporation, ask the owner of the corporation back up the lease with his or her personal assets. This
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      a property with multiple tenants instead of single tenant. This will spread out the risk as you don’t put all eggs in one basket. When a tenant terminates a lease, you will potentially just lose a portion of the total income. It’s also easy to find a tenant looking for a small 1000 SF unit.
    6. Choose a property with long term leases over month-to-month leases. Month to month tenants can move out with short notice when their businesses go down.
    7. Avoid having most of the leases expire at the same time. That way in the worst case, you will not have to face with a scenario that the whole building is vacant.
    8. Choose brand-name over no-brand tenants when you have a choice. Leases from brand-name companies like Walgreens, Subway, HR Block are sometimes guaranteed by the corporations. So when they have to shut down the store, the corporations will continue paying rents. According to statistics, brand name tenants are more likely to be in business next year than non-brand name tenants.
    9. Ask for lease guarantee. When a tenant is a small corporation, ask the owner of the corporation back up the lease with his or her personal assets. Thi
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    10. Choose a property with long term leases over month-to-month leases. Month to month tenants can move out with short notice when their businesses go down.
    11. Avoid having most of the leases expire at the same time. That way in the worst case, you will not have to face with a scenario that the whole building is vacant.
    12. Choose brand-name over no-brand tenants when you have a choice. Leases from brand-name companies like Walgreens, Subway, HR Block are sometimes guaranteed by the corporations. So when they have to shut down the store, the corporations will continue paying rents. According to statistics, brand name tenants are more likely to be in business next year than non-brand name tenants.
    13. Ask for lease guarantee. When a tenant is a small corporation, ask the owner of the corporation back up the lease with his or her personal assets. Thi
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      rio that the whole building is vacant.
    14. Choose brand-name over no-brand tenants when you have a choice. Leases from brand-name companies like Walgreens, Subway, HR Block are sometimes guaranteed by the corporations. So when they have to shut down the store, the corporations will continue paying rents. According to statistics, brand name tenants are more likely to be in business next year than non-brand name tenants.
    15. Ask for lease guarantee. When a tenant is a small corporation, ask the owner of the corporation back up the lease with his or her personal assets. Thi
      Marketing That Measures Up
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      ue paying rents. According to statistics, brand name tenants are more likely to be in business next year than non-brand name tenants.
    16. Ask for lease guarantee. When a tenant is a small corporation, ask the owner of the corporation back up the lease with his or her personal assets. This way you are more likely to get your rent paid during bad times.
    17. Have a mixture of tenants with different businesses. For example, you don’t want to have 3 barbershops in a shopping center as they will compete against each other and take the other out of business. When the economy slows down, it may affect a certain industry. By having tenants with different businesses, you reduce the chance that the economy affects most of your tenants.
    18. Request seller for rent guarantee. When you purchase a commercial property that is not 100% leased, ask the seller to provide a 12-month rent guarantee for vacant units. That way you have up to 12 months to look for tenants.
    19. Invest in a stable and growing area instead of a declining area. Your tenants are more likely to do well and have money to pay you the rent.
    20. Invest in an area with strong income. The median household income in the US is about $46,000 per year. So if the area has median household income of only $28,000 per year, it’s likely a rough area with lots of graffiti’s. This is a risky area to invest.
    21. Choose triple-net leases over gross leases. Maintenance is somethi

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